Homebuyers waiting on a return to lower mortgage rates before buying are probably out of luck, a top housing economist told local homebuilders and Realtors Tuesday.

Lawrence Yun, the chief economist for the National Association of Realtors, said home borrowing rates are headed higher as the Federal Reserve Bank tightens its monetary policy, inflation edges higher and government deficits worsen.

"Some consumers may be thinking that because mortgage rates are higher than they were a year ago, maybe I should just wait until rates fall down again," Yun said during a luncheon speech to the Greater Chattanooga Realtors and the Home Builders Association of Chattanooga. "Well, they will be waiting forever."

The top economist for America's biggest real estate association said he expects 30-year mortgage rates will likely rise to about 5 percent, up from the current rate of 4.75 percent, over the next 12 months.

That's still only a fraction of the 14 percent mortgage rates of the 1970s when the Fed tightened to help control double-digit inflation rates. But it could make housing affordability even more challenging for many would-be buyers.

Already, rising home prices and mortgage rates have cut into some home sales, keeping overall sales of single-family homes relatively stable despite the overall improving economy. In June, for instance, single-family home sales by Chattanooga Realtors were down 5 percent from a year earlier, although sales are still up slightly for the entire first half of the year.

Yun said most millennials and other young adults say they still want to buy and own their own home, but college debt and higher prices are making it more difficult for many to afford to buy a house.

"The drop in the homeownership rate (from the peak a decade ago) is not their desire," Yun said. "It is the circumstance of not having enough for a down payment, especially as home prices go up."

Credit standards are higher than before the Great Recession so qualifying for a mortgage is more difficult than a generation ago for many young homebuyers.

In response, the Tennessee Valley Federal Credit Union (TVFCU) said it is offering a no downpayment mortgage for those with strong credit ratings and good income "and we're really killing it with that product," TVFCU President Todd Fortner said.

"This is our most popular mortgage product right now," he said.

Home prices in Chattanooga during the second quarter already rose twice the rate of inflation. In the spring quarter of the year, the median price of the homes sold by Realtors in Chattanooga rose 5.8 percent from a year go to a record high of $188,600. Despite those gains, Chattanooga prices still average nearly 30 percent less than the U.S. average, however.

Yun forecasts that the pace of rising home prices will likely slow in 2019 and 2020 but still increase by an average of 4 percent.

Despite higher prices and mortgage rates, Yun predicts home sales should still rise 2 percent or more next year and in 2020 as the economy continues to grow and more inventory of new homes are added.

Despite the gain in residential real estate sales, Yun said commercial real estate sales could decline in the next year until market prices adjust to rising interest rates.